A guaranteed maximum price (also known as GMP, not-to-exceed price, NTE, or NTX) contract is a cost-type contract (also known as an open-book contract) where the contractor is compensated for actual costs incurred plus a fixed fee subject to a ceiling price. The contractor is responsible for cost overruns, unless the GMP has been increased via formal change order (only as a result of additional scope from the client, not price overruns, errors, or omissions). Savings resulting from cost underruns are returned to the owner.
This is different from a fixed-price contract, also known as stipulated price contract [1] or lump-sum contract, where cost savings are typically retained by the contractor and essentially become additional profits.[2]
See also
- Time and materials
References
- ^ Pawson, O., "Stipulated Price Contract", Canadian Consulting Engineer, accessed 14 December 2019
- ^ Cushman, Robert Frank (1999). Construction Law Handbook, Vol. 1. Aspen Law and Business. p. 357. ISBN 0-7355-0392-3.